Private Blockchain

#1

Hi,

First of all,
thanks you so much for educating us.

My Quick Question is,
I am confused with word “Private Blockchain”
is it running on top on Ethereum network or something completely different.

Thanks,

#2

Hi,

A bit of a hard question to ask without context, as I don’t know whether you are asking this in regard to a specific blockchain / blockchain based crypto currency, or if you are simply asking what the term means.

Blockchain are generally viewed as permissionless, decentralised, distributed global public ledgers, that are controlled and managed by the community it supports.

A private blockchain is using the exact same technology, and centralising it within an organisation / group of organisations, with the organisation (or individual) controlling the entire blockchain. There is no public record, there is limited decentralisation.

Both a private and public blockchain will have a decentralised peer2peer network (in private it is limited to an organisation or set group of people). They also keep the replicas in sync across the network through some form of consensus algorithm and they both provide certain guarantees on the immutability of the ledger, even when some participants are faulty or malicious.

The difference lies in, not using a crypto currency (though some might use a token) and access as well as participation.

  • In a public blockchain, everyone has access, even if you are not a participant in the blockchain. For example, I don’t have bitcoin but I can see all data related to all bitcoin transactions.

  • In a private blockchain, you need to be invited to join the chain and usually there is some form of validation of who you are by the controllers of the network before you can participate.

  • In a public blockchain, there is a consensus algorithm, which every participant of the blockchain (in principle) can participate in, and nobody can restrict your participation.

  • Private blockchains are usually permissioned blockchains, where participation rights are preset and predetermined, not by your level of participation but by a set of rules. I.e. a CEO has different access / participation than a software developer.

So if as an organisation you wish to store all of your data on a blockchain rather than a centralised SQL or No-SQL database, you can run a private blockchain, you can still distribute this data across all computers on your private network, get network consensus, etc. What you wouldn’t do is mine for coins, since those coins would have no value to the rest of the world.

You could still run a private blockchain across a variety of organisations, but you restrict public access. An example of a private blockchain is Hyperledger Fabric from the Linux organisation.

Does it run on top of Ethereum, no it can’t, since the technology (Ethereum’s blockchain) is a public blockchain, anything that runs on top of it is also public (I believe).

Hope this clarifies, if not, let me know :slight_smile:

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